Why your 10-year maintenance plan must be regularly updated
by Amy Botha, Mirfin Valuation Services
The Sectional Titles Schemes Management Act requires schemes to have a 10-year maintenance plan in place. It specifies that major capital items, such as exterior painting, waterproofing, roof replacement, security system upgrades, driveway renovations, modernising elevator cabs and upgrading to energy-efficient lighting, must be included.
The Act further requires that the plan, along with a budget, must be presented at every annual general meeting (AGM).
“The problem is that the Act does not provide much guidance as to how the maintenance, repair and replacement plan (MRRP) should be set up. This places the onus on the trustees to prepare as broad, or as narrow, a maintenance plan as they see fit. Therein lies the dilemma,” says Björn Laubscher, Managing Director of Mirfin Valuation Services.
A comprehensive and detailed plan allows the sectional title scheme to allocate its finances more accurately, in comparison to a superficial plan that often lacks detail and transparency. With a wide-ranging and itemised plan, trustees and managing agents will be able to see exactly when, on which items and for what approximate cost maintenance is being planned. The 10-year maintenance plan is most effective when it is updated regularly with current data such as contractor fees.
Advantages of updating the 10-year maintenance plan regularly
By updating the maintenance plan regularly, trustees can plan ahead and obtain competitive quotes for scheduled maintenance work, allowing them to plan more accurately for the subsequent financial years. This also ensures that trustees are compliant in their fiduciary responsibility.
Furthermore, when the plan is kept up to date, maintenance works are less likely to fall through the cracks. Adding and adjusting data points also allows for the cash-flow projection to be fine-tuned continuously.
Consequences of not updating the 10-year plan
By failing to keep the 10-year plan updated, trustees will not be able to accurately keep track of planned capital expenditure, which will most likely lead to an incorrect levy calculation. It can also result in a lack of funds for planned maintenance work, not to mention unplanned emergency repairs.
In addition, a delay in updating the maintenance plan may necessitate special levy to cover unexpected maintenance costs, putting undue financial pressure on the body corporate.
“We see what difference a well-constructed and regularly updated 10-year maintenance plan can make to a scheme, and highly recommend that trustees commit to keeping their maintenance plan up-to-date at all times. Mirfin’s client dashboard offers an easy and cost-efficient option for all sectional title schemes,” concludes Laubscher.